The Economic Situation of Individual (Family) Farms in Hungary

Combined elaboration of the first and second parts of papers prepared for presentation at the IAMO FORUM 2007 Halle, Germany 24-29 June 2007 and the IAAE-EAAE 104th seminar Budapest, Hungary 6-8 September 2007. In 2003 a research study looked at the position of smallholders; the survey was carried out using questionnaires and interviews. The farms included in the survey were situated in 3 counties in the Southern Great Plain of Hungary and in 3 counties of the western part of the country (Transdanubia). The results of the survey showed that there was a firm tendency of concentration among the Hungarian individual farms. Though their average size is about 3 ha, the number and area of farms over 50 ha size are rapidly growing and taking a significant part of the total individual agricultural area. The number of small farms is great but their total farming area is relatively small. The concentration takes place primarily due to renting. The land market is sluggish mainly owing to the land-buying restrictions and the small intention to sell of those owners who are waiting for higher prices. Land prices are low but rising, especially on the Western border of the country, near to Austria. The dominance of arable production and within that cereal production, especially on the larger individual farms, points to a prevalence of extensive farming The present support and subsidy system fortifies this tendency. When comparing the Southern Plain with western Transdanubia, it can be said that agricultural production is greater in the former region and more people are involved in agriculture. There is a higher share of under-cover production of vegetables and ornamental plants and animal husbandry. However, it seems that in western Transdanubia the spirit of enterprise is stronger than in the Southern Plain: more farmers enter into contractual agreements, more farmers make use of credits and subsidies, and the farms operate with greater profitability. Nevertheless, the proximity of western Transdanubia to industrial and service centers and, furthermore, its closeness to Austria tend to suppress agricultural activities. The regression analyses with respect to efficiency and profitability and the cluster analyses supported the assessments of the descriptive analyses and produced the following main conclusions: the larger farms, farmed by younger and better-educated individuals, are more efficient and profitable than the others. Furthermore, farmers with significant conceptions for development seem to achieve greater profitability